Chicken Soup For The Soul Entertainment Files for Chapter 11 Bankruptcy Protection
After months of financial hardship, Redbox’s parent company, Chicken Soup for the Soul Entertainment, has filed for Chapter 11 bankruptcy protection.
The company conveyed news of the Delaware lawsuit in a message to employees in the early hours of Saturday.
“Overnight, we filed for Chapter 11 bankruptcy protection,” the message read. “In connection with the filing, we requested approval of a debtor in possession [DIP] “We are currently seeking a loan. Following court approval, we expect payroll to be funded early this week and that funding for this coming week’s payroll will also be secured. We also expect to have funds in place to reinstate medical benefits by May 14, 2024 and beyond. We will provide regular updates.”
Delinquent payroll and suspended benefits, first reported last week by Deadline, have become the latest fire for the company to put out. It has struggled over the past year after taking over Redbox in a debt-heavy deal valued at $375 million. In addition to the financial burden of the transaction, Hollywood’s studio pipeline has been constrained by the double strikes in 2023 and physical rents also continue to decline. Suppliers and filmmakers were not paid and some took legal action.
The Redbox deal capped a string of acquisitions since the company’s initial public offering in 2017 as a spinoff of the popular Chicken Soup line of self-help books. The company acquired Sony’s Crackle streaming service and also took over 1091 Pictures, Screen Media and TV production company Sonar Entertainment. At one point, the company became one of the top ad-supported free streaming companies, with Crackle, Popcornflix, and an eponymous Chicken Soup channel designed for healthier, female-oriented programming.
It will now be up to a Delaware bankruptcy court to determine how the company moves forward and whether it can come out the other side. The media business has seen a series of Chapter 11 filings over the past two years as Covid added to an already daunting set of business challenges. Vice Media, Audacy and Regal Cinemas’ parent company Cineworld are among those resorting to bankruptcy, with Cineworld managing to continue operating and emerge with many of its theater assets in operation.
Under the Chapter 11 setup, secured creditors like banks will be first in line to be paid, while unsecured creditors like suppliers will be next. Shareholders in most scenarios are the ones left holding the bag. CSSE’s beleaguered shares were already in danger of being delisted by Nasdaq. They closed Friday trading at 19 cents per share, down 7% on the day, giving the company a market value of just $6.3 million.
